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Business owners looking to get paid faster are right to think about sending automated payment reminders. After all, payment reminders work. But as your business grows, your system of payment reminders needs to change. What worked for your small business with its handful of debtors won’t necessarily work as your accounts receivable (AR) function expands.
The fact is, not all automated payment reminder systems are created equal.
The goal of accounts receivable management is not to get good at issuing payment reminders. The goal is to get paid on time.
Inbuilt payment reminders in your accounting software allow you to generate more reminder activity. You can automatically send payment reminders, or even dunning letters. But then what? Are you confident that your debtor received your email? Can you be sure your debtor has everything they need to understand their debt? Did you get paid?
An effective payment reminder system not only delivers emails, it then feeds back valuable information so you can make better decisions, quickly. As your debtor activity grows, look for a system that provides the following:
A common pain point in bigger businesses is keeping track of a growing list of debtors with multiple overdue invoices. You used to be able to rely on Karen in accounts to follow-up every overdue account. But when you have Karen, John and Amy on the job, your expanding team needs to share status reports with each other. That can be hard to do when everyone keeps separate notes, or worse, none at all.
When you have a team of people sending reminders and making phone calls to debtors it’s important to have one source of truth. You’ll need one consistent process and a central place where all debtor data and communication lives.
Think of your CRM. Just as your growing business may have upgraded to customer relationship management system for a complete view of customer relationships, your debtor management system should work as your debtor CRM. It becomes your go-to source of truth–an audit trail to track debtor activity. Your team will work faster once they eliminate multiple spreadsheets and call lists and work from one database that houses a complete history of payment reminders sent, phone calls made, promises of payments and next course of action.
You know the power of a best practice invoice to help you get paid faster. But did you know that your payment reminders can also be optimised to boost your chances of making a collection?
Make a few simple tweaks to your basic payment reminders so they start collecting money for you:
Every communication from your business – including payment reminders – is a reflection on your professionalism. As your business matures, so should the quality of your communications to customers. You’ll want your unique branding, tone and language evident in your payment reminders. Not only will your debtors instantly understand the communication is from your business, you will differentiate yourself from the thousands of companies sending generic payment reminders.
A key reason that big businesses are good at collections is their capacity to keep pursuing a debt until the customer pays up. As you grow, your payment reminder system should support your collection efforts with more services. ezyCollect, for example, is integrated with third party providers so you can add escalating actions to your workflow sequence.
For example, within ezyCollect you can instruct a debt collection agency to send a demand letter on your behalf, or even handle the entire debt collection for you. Because the system has an ecosystem of partners you can activate with the click of a button, your debt collection efforts never need to stall.
When you’re running a mid-sized business, you’ll be taking a systems thinking approach to your operations. You’ll understand that business units impact each other and that information needs to flow between departments for operational efficiency.
Your accounts receivable function can collate valuable insights about your customers’ paying habits, use of credit and cashflow. However, without a system that delivers insights, you could be left operating in the dark. By unlocking the insights in your AR function, you can have more certainty around cashflow forecasting and credit control. Look for a system that deliver insights, not just data.
ezyCollect offers an end-to-end solution for complete accounts receivable management.
Research from ezyCollect shows that most overdue invoices are paid by the third reminder. That means the supplier must typically request payment two or three times before an invoice is paid. In the digital age, those reminders are usually sent by email and SMS.
With the right format, tone and timing your reminders for overdue invoices can be very powerful. Done well, your reminders become a great support tool for your customers’ payables team. Suppliers who use ezyCollect report back that their customers actually thank them for sending helpful payment reminders!
Remember, your reminder is a communication from your business and is great opportunity to represent your professionalism and enhance your customer relationship.
Our tips below will help your customers with overdue invoices to understand their debt and respond promptly to your requests for payment.
Email continues to be both a universal and popular mode of communication to reach overdue customers. But simply sending an email doesn’t mean your customer will open it. While emails are relatively cheap—and automation makes the cost per email even cheaper—an ineffective email (or series of emails) is a waste of time and money.
Make it easier for your customer to respond to your emails:
Subject: Reminder: Your account from <your company name> is overdue
Dear <Customer name>,
I hope you are well. A friendly reminder that our trading terms are <payment terms in days>.
Your oldest overdue invoice is now <number of days> days overdue.
The total amount overdue is <total amount overdue>. The table below summaries all overdues.
<table of overdue invoices>
I have attached invoice copies for your reference.
We would appreciate immediate payment.
We welcome your payment by the following methods:
<include all payment methods>
To pay via credit card, please click the Pay Now button below:
<Pay Now button>
Please contact us immediately for any queries about your account.
<Contact name, email, phone number>
(Note: If using ezyCollect’s automated payment reminders, you can set up your email templates with drag and drop merge fields like ‘total amount overdue’, an ‘overdue invoice table’, and a ‘Pay Now’ button for online payments. The system collates all relevant information for you.)
Your SMS reminder will be much shorter than your email reminder. You have much less ‘real estate’ to work with!
Improve your collections and communications workflow with accounts receivable automation from ezyCollect. Watch a free demo to see how it can help you.